Burgesses accuses big lenders of mortgage payment protection insurance rip-off
HEALTH CARE INSURANCE REPORT - 1ST OCTOBER 2003
Mortgage payment protection insurance is being mis-sold to the self-employed by big mortgage lenders who are also charging well over the odds, specialist intermediary Burgesses Limited has claimed.
Director Simon Burgess claimed that mortgage payment protection insurance covers is available from just £3.95 per £100 monthly benefit insured but that the average rate for High Street lenders is £5.78% while Cheltenham & Gloucester charges as much as £7.70%. He also says that many self-employed people find it virtually impossible to claim under the unemployment element of plans and may not need that element of the cover, but that lenders usually only sell mortgage payment protection insurance as a complete package.
Most mortgage payment protection insurance is taken out with a new mortgage and the Council of Mortgage Lenders (CML) believes that around 55% of borrowers need mortgage payment protection insurance cover. In March the CML replaced its target take-up rate of 55% with a target to keep possessions below 30,000 a year (against a ten year average of 35,000) and to keep possessions below what they would have been in comparative economic circumstances in the past.
At the end of June 2002 there were an estimated 2,518,000 mortgage payment protection insurance policies in force, representing 22.4% of all mortgages. Claims frequency was 2.7% and claims accepted had increased to 89%.
On 13th August the ABI published its latest claims benchmarking study on both loan and mortgage payment protection insurance policies. Some 87% of customers were satisfied with the way their claim was handled, 90% felt they had been treated fairly but only 77% were happy with the level of information they received during their claim.
On 31st March 2003, the industry launched its ‘Consistent interpretations’ campaign setting out claims principles with a view to improving the customer claim experience.
